MICROECONOMICS STUDENT ID: [Pick the date].

MICROECONOMICS
STUDENT ID:
[Pick the date]

TASK 1
(a) The requisite table along with quantity demanded is shown below.
The graph for the above demand table is shown below.
b) The requisite table indicating the price and quantity demanded is shown below.
The graph for the above demand table is shown below.
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c) It is apparent from the above graph that the demand after advertisement in inelastic in
comparison with the original demand curve which was elastic. Hence, advertisement had
provided the ability to increase the prices without having proportionate adverse impact on the
quantity sold (Mankiw, 2014).
TASK 2
The three forms selected are monopoly, oligopoly and monopolistic competition. The two
differences between them are highlighted as follows (Krugman & Wells, 2016).
1) The number of sellers present in the market is different for each market. Monopoly has only
one seller, oligopoly has few sellers whereas monopolistic competition have many sellers.
2) The entry barrier also tends to differ for each of the given markets. Monopoly has the highest
entry barrier since no other firm can enter the market, oligopoly has high entry barrier but
lower than monopoly while monopolistic competition has very low entry barriers.
Two similarities between the chosen three types of market structures are indicated as follows
(Nicholson & Snyder, 2015).
1) Neither of these market structures tend to have allocative efficiency in the long run as price
and marginal cost are not equal.
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2) The products sold in all of these markets are not homogeneous but differentiated by price and
quality.
TASK 3
Current salary = OMR 8,000
Increase in salary = OMR 1,000
Percentage increase in salary = (1000/8000)*100 = 12.5%
Demand of cruises at original salary = 1
Demand of cruises at new salary = 2
Percentage increase in demand of cruises = ((2-1)/1)*100 =100%
Hence, income elasticity for vacation cruises = (100/12.5) = 8
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References
Krugman, P. & Wells, R. (2016).Microeconomics (2nded.). London: Worth Publishers
Mankiw, G. (2014) Microeconomics (6thed.). London: Worth Publishers.
Nicholson, W. & Snyder, C. (2015).Fundamentals of Microeconomics (11thed.). New York:
Cengage Learning.
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